What are the end-result possibilities with a short sale?
Before deciding if a short sale is right for you and committing to the short sale process, you need to make a few important decision:
Are you committed to letting the property go no matter what?
Do you understand the end-result options of a short sale and are you willing to accept them?
Unfortunately the vast majority of banks will require you to be delinquent in your mortgage payments before they will consider a short sale. Once you stop making payments on your mortgage, the banks start the collection activity on your account and the foreclosure clock begins. Usually you have 3 - 6 months before a lender initiates the foreclosure process. This timeline varies by lender with some being sooner and some taking over a year before they start foreclosure proceedings. It is important to understand that proceeding with a short sale does not stop the foreclosure clock and process. Only in limited cases, will a short sale stop a foreclosure. One such case is if your loan and situation qualifies for a HAFA short sale. This is a government sponsored foreclosure alternative program with specific criteria. Another situation that can stop a foreclosure is if you have a buyer with a signed purchase and sales agreement and the lender has approved the short sale. Another way to stop a foreclosure is to pay back all of the missed payments, late fees and penalties to bring your mortgage back in good standing. There may be one or two other strategies to stop or postpone a foreclosure while you pursue a short sale that depend on your situation, your loan, and the lender we are dealing with, including a deed in lieu of foreclosure and bankruptcy. This is why it is important for you to be committed to letting the property go and to obtaining mortgage relief before stopping your monthly payments to your lender and pursuing a short sale.
So what are the end-result possibilities with a short sale?
Once you find a buyer and submit the short sale application and package to the lender, the lender may respond with one of the following possibilities or a combination of them:
1. The lender could outright deny the short sale;
2. The lender could counter the offer submitted by the buyer;
3. The lender could approve the short sale and request a cash contribution from the seller towards the deficiency loss;
4. The lender could approve the short sale and request the seller take an unsecured promissory note for the deficiency balance or a portion of the deficiency balance payable over 20 - 30 years usually at 0% interest;
5. The lender could approve the short sale with a complete waiver of the deficiency balance;
6. The lender could approve the short sale with a complete waiver of the deficiency balance plus a cash relocation incentive to the seller of $3,000 or more.
We always negotiate short sales for our clients with a complete deficiency balance waiver as our goal. However, this is case sensitive and depends on many factors including income, credit score, debts, cash flow, personal situation, the lender involved, and many more variables.
It is important to understand all of these end-result options and to discuss your situation with an experienced attorney in order to effectively evaluate your particular situation and likely end-result options.
Call Tomassi Law Associates, LLC for a free consultation at 401-941-LAW1 (5291) or via e-mail at firstname.lastname@example.org. For more information see our website.